Research On The Effects Of Transfering Shareholding Ratios From Buyers To Sellers On Private Benefits Of Control

Non-tradable share is a special kind of phenomenon of China’s securities market. Since the Non-tradable share reform in 2005, most of the listed company has completed the share reform program and the conversion between non-tradable and tradable shares has been gradually realized. This paper improves the traditional BH model and measures the level of private benefits of control of Chinese market from June 2009 to June 2014 after the reform. In the meantime, the paper also analyzes the effect of changes in equity of buyers and sellers on private benefits of control.In order to deepen the analysis, the companies are grouped according to the ownership state before and after the sale in the company. After the empirical analysis, we find the private benefits of control measured based on the average stock price before the signing of the agreement is higher than the private benefits of control measured based on the stock average price before announcement. The buyer is not a shareholder before the sale and the seller is not a shareholder after the sale, whose private benefits of control is the highest. The buyer is a shareholder before the sale, whose private benefits of control is lower than the buyer is not a shareholder before the sale. The seller is not a shareholder after the sale, whose private benefits of control is obviously higher than the seller is still a shareholder after the sale. In the condition that the seller is still a shareholder after the sale, the seller shows obvious supportable benefit behavior. The private benefits of control not only has a relationship with the position that the buyers and sellers but also has an positive relationship with the changes in equity ratio of sellers when the ratio is above 15%. What’s more, the private benefits of control has a positive relationship with the changes in equity ratio of buyers when the ratio is under 20% and has a negative relationship with the changes in equity ratio of buyers when the ratio is above 20%. In addition, this study found that the decline of the private benefits of control after the equity division reforms is not obvious. Although the reform inhibits the exploitation behavior of major shareholders to a certain extent, but there is no fundamental change big shareholders encroach on the interests of small shareholders.